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Lots of Cycles and Recycles

Jan 17

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Lots of activity the past two days on the wheel front. First, yesterday, I started a new wheel cycle in GM. I haven’t had a covered call for a bit there, but yesterday, I sold the Jan31 56 calls. I say “cycle” because if it is in the money at expiry, I’ll have to adjust to continue the trade before reaping the profit on the complete cycle. That’s my whole premise of management with wheel trades.

Next—and this one is an interesting play—the stock BLBD is one I’ve liked, but it hasn’t really done anything for a while.

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So, I’ve been selling puts. The 40-strike puts I sold at 2.00 were about to expire worthless. So I bought them back at a dime and sold the February 40 puts at 2.25.

While this seems like a sort of blah stock, I’ve been able to average about $2 in option premium a month on this $40 stock for a few cycles. To annualize that, that 5% a month comes out to 60% a year on a stock that isn’t really doing anything. So I like it strategically.

Another newly began cycle I initiated yesterday was in...